Docket No. 2008-39238L 7 of 7

PETITIONER:
Employer Account No. - 2605740
PINAR CAFE INC
3920 W FLORA ST
TAMPA FL 33614-3977

PROTEST OF LIABILITY

DOCKET NO. 2008-39238L
RESPONDENT:
State of Florida
Agency for Workforce Innovation
c/o Department of Revenue

O R D E R

This matter comes before me for final Agency Order.

The issue before me is whether services performed for the Petitioner by the Joined Party and other individuals as production/stock persons constitute insured employment pursuant to Sections 443.036(19), 443.036(21); 443.1216, Florida Statutes, and if so, the effective date of the liability.

With respect to the recommended order, Section 120.57(1)(l), Florida Statutes, provides:

The agency may adopt the recommended order as the final order of the agency. The agency in its final order may reject or modify the conclusions of law over which it has substantive jurisdiction and interpretation of administrative rules over which it has substantive jurisdiction. When rejecting or modifying such conclusions of law or interpretation of administrative rule, the agency must state with particularity its reasons for rejecting or modifying such conclusion of law or interpretation of administrative rule and must make a finding that its substituted conclusion of law or interpretation of administrative rule is as or more reasonable than that which was rejected or modified. Rejection or modification of conclusions of law may not form the basis for rejection or modification of findings of fact. The agency may not reject or modify the findings of fact unless the agency first determines from a review of the entire record, and states with particularity in the order, that the findings of fact were not based upon competent substantial evidence or that the proceedings on which the findings were based did not comply with essential requirements of law.

Exceptions to the Recommended Order were not received from any party.

Upon review of the entire record., it was determined that Conclusion of Law #8 and the second paragraph from the bottom of the third page of the Recommended Order required clarification. In these portions of the Order, the Special Deputy refers to other occupations, surf instructors and packers. A review of the record establishes that the Special Deputy was referring to production/stock persons. Conclusion of Law #8 is amended to say:

The issue in this case, whether services performed for the Petitioner by production/stock persons constitute employment subject to the Florida Unemployment Compensation Law, is governed by Chapter 443, Florida Statutes. Section 443.1216(1)(a)2., Florida Statutes, provides that employment subject to the chapter includes service performed by individuals under the usual common law rules applicable in determining an employer-employee relationship.

The second paragraph from the bottom of the third page of the Recommended Order is also amended as follows:

It was noted that in addition to the work as a production/stock person, the Joined Party performed volunteer services at the Petitioner's diner. The volunteerservices were notaddressed intheliability determination issuedby the DOR and are not considered in the Recommended Order. ThePetitioner's liabilityfor wages paid to the joined party is due solely to the services performed for the Petitioner's sweets manufacturing business.

It was also determined from a review of the entire record that a portion of the last paragraph on the third page of the Recommended Order must be rejected because it is not based on competent substantial evidence. A review of the record establishes that the Joined Party and the Petitioner entered into a verbal agreement.

The Special Deputy’s ultimate conclusion that an employment relationship existed between the Petitioner and the production/stock persons is supported by the record. The degree of control exercised by a business over a worker is the principal consideration in determining an employment relationship. The Special Deputy’s Conclusion of Law #15 lists several aspects of the relationship where the Petitioner exerted control over the Joined Party. The Special Deputy’s conclusion that an employment relationship existed between the Petitioner and the production/stock persons reflects a reasonable application of the law to the facts and is adopted. The last paragraph on the third page of the Recommended Order is revised as follows:

Rule 60BB-2.035(7), Florida Administrative Code, provides that the burden of proof is on the protesting party to establish by a preponderance of the evidence that the determination was in error. In view of the evidence presented, the Petitioner did not meet its burden to establish an independent contractor relationship. The Joined Party and other workers performing services as production/stock persons for the Petitioner under the same terms and conditions were employees. It is recommended that the determination be affirmed.

Having fully considered the Special Deputy’s Recommended Order and the record of the case and in the absence of any exceptions to the Recommended Order, I adopt the Findings of Fact and Conclusions of Law as amended herein. A copy of the Recommended Order is attached and incorporated in this Final Order.

In consideration thereof, it is ORDERED that the determination dated March 30, 2008, is AFFIRMED.

DONE and ORDERED at Tallahassee, Florida, this ______day of November, 2008.

Cynthia R. Lorenzo
Deputy Director
AGENCY FOR WORKFORCE INNOVATION


AGENCY FOR WORKFORCE INNOVATION

Office of Appeals

MSC 347 CALDWELL BUILDING

107 EAST MADISON STREET

TALLAHASSEE FL 32399-4143

PETITIONER:
Employer Account No. - 2605740
PINAR CAFE INC
3920 W FLORA ST
TAMPA FL 33614-3977

PROTEST OF LIABILITY

DOCKET NO. 2008-39238L
RESPONDENT:
State of Florida
Agency for Workforce Innovation
c/o Department of Revenue

RECOMMENDED ORDER OF SPECIAL DEPUTY

TO: Cynthia R. Lorenzo, Deputy Director

Agency for Workforce Innovation

This matter comes before the undersigned Special Deputy pursuant to the Petitioner’s protest of the Respondent’s determination dated March 30, 2008.

After due notice to both parties, a telephone hearing was held on July 11, 2008. The Petitioner was represented by an accountant. The Respondent was represented by a Revenue Administrator from the Department of Revenue. The Joined Party represented himself.

The record of the case, including the recording of the hearing and any exhibits submitted in evidence, is herewith transmitted. No Proposed Findings of Fact or Conclusions of Law were received.

Issue: Whether services performed for the Petitioner by the Joined Party and other individuals constitute insured employment pursuant to Sections 443.036(19), 443.036(21); 443.1216, Florida Statutes, and if so, the effective date of the liability.

Findings of Fact:

1. The Petitioner is a corporation which began operating as sweets manufacturing company in August 7, 2006. The company president and her husband are the corporate officers. In addition to the sweets manufacturing company, the Petitioner’s president operated a diner. The Joined Party performed services for the sweets manufacturing company as a production/stock person. The production/stock persons are the class of workers at issue in this appeal.

2. The Joined Party lived next door to the business and asked the president if the Petitioner needed help. The Petitioner and Joined Party entered into an oral agreement at the time of hire. The president of the Petitioner company informed the Joined Party that his primary duties would involve packaging and labeling sweets at the Petitioner’s place of business. The Joined Party and the president of the corporation were the only persons who performed these duties.

3 The Petitioner offered the Joined Party a flat $250.00 gross payment each week for services performed. The Petitioner’s president proposed the rate of pay and the Joined Party accepted. The Petitioner told the claimant that no taxes would be withheld, but at the Joined Party’s request, the Petitioner deducted $25.00 each week and paid the Joined Party a check each week for $225.00. The Joined Party was not scheduled to work on certain holidays and was paid the same rate whether a holiday fell within the week or not.

4. The president would call the Joined Party the day before his shift and tell him what time to arrive at the workplace. The Joined Party’s hours would vary based upon the packaging/labeling needs for a particular day. In addition to packaging sweets, the Joined Party sometimes volunteered to wash dishes and perform other duties in the diner for no additional payment.

5. The Joined Party received no vacation, retirement or health benefits. The Joined Party was not required to wear a particular uniform to perform the work.

6. The job was very simple and required no particular skill or training. The Joined Party believed he was an employee of the company. The Petitioner did not consider him to be an employee.

7. The Petitioner issued a Form 1099 to the Joined Party each year for services provided. The $25.00 withheld each week by the Petitioner was not returned to the Joined Party. The Joined Party paid his own taxes at the end of the year.

Conclusions of Law:

8. The issue in this case, whether services performed for the Petitioner by surf instructors constitute employment subject to the Florida Unemployment Compensation Law, is governed by Chapter 443, Florida Statutes. Section 443.1216(1)(a)2., Florida Statutes, provides that employment subject to the chapter includes service performed by individuals under the usual common law rules applicable in determining an employer-employee relationship.

9. The Supreme Court of the United States held that the term "usual common law rules" is to be used in a generic sense to mean the "standards developed by the courts through the years of adjudication." United States v. W.M. Webb, Inc., 397 U.S. 179 (1970).

10. The Supreme Court of Florida adopted and approved the tests in 1 Restatement of Law, Agency 2d Section 220 (1958), for use to determine if an employment relationship exists. See Cantor v.
Cochran, 184 So.2d 173 (Fla. 1966); Miami Herald Publishing Co. v. Kendall, 88 So.2d 276 (Fla. 1956); Mangarian v. Southern Fruit Distributors, 1 So.2d 858 (Fla. 1941); see also Kane Furniture Corp. v. R. Miranda, 506 So2d 1061 (Fla. 2d DCA 1987).

11. Restatement of Law is a publication, prepared under the auspices of the American Law Institute, which explains the meaning of the law with regard to various court rulings. The Restatement sets forth a nonexclusive list of factors that are to be considered when judging whether a relationship is an employment relationship

12. 1 Restatement of Law, Agency 2d Section 220 (1958) provides:

(1) A servant is a person employed to perform services for another and who, in the performance of the services, is subject to the other's control or right of control.

(2) The following matters of fact, among others, are to be considered:

(a) the extent of control which, by the agreement, the business may exercise over the details of the work;

(b) whether or not the one employed is engaged in a distinct occupation or business;

(c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;

(d) the skill required in the particular occupation;

(e) whether the employer or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work;

(f) the length of time for which the person is employed;

(g) the method of payment, whether by the time or by the job;

(h) whether or not the work is a part of the regular business of the employer;

(i) whether or not the parties believe they are creating the relation of master and servant;

(j) whether the principal is or is not in business.

13. Comments in the Restatement explain that the word “servant” does not exclusively connote manual labor, and the word “employee” has largely replaced “servant” in statutes dealing with various aspects of the working relationship between two parties.

14. In Department of Health and Rehabilitative Services v. Department of Labor & Employment Security, 472 So.2d 1284 (Fla. 1st DCA 1985) the court confirmed that the factors listed in the Restatement are the proper factors to be considered in determining whether an employer-employee relationship exists. However, in citing La Grande v. B&L Services, Inc., 432 So.2d 1364, 1366 (Fla. 1st DCA 1983), the court acknowledged that the question of whether a person is properly classified an employee or an independent contractor often can not be answered by reference to “hard and fast” rules, but rather must be addressed on a case-by-case basis.

15. The facts reveal some elements of independence and some elements of employment in this relationship. Factorspointing toward an independent relationshipinclude that the Petitioner offered no health or retirements benefits, issued Form 1099 to the Joined Party to use in filing taxes, and the companypresident believed she was setting up an independent contractor relationship. However, significant employment factors of the relationship outweigh the factors of independence. The Petitionercontrolled all aspects of the hiring process,there was no written contract, the Petitionerestablished the days andtimes when the Joined Party was to report to work. The Joined Party was paid a salary each week regardless ofthe number of hours worked or tasks performed.The Petitioner deducted $25 per week for taxes, although that money was not used to pay taxes nor returned to the Joined Party to prepare his own taxes. The work done by the Joined Party was part of the regular business of the Petitioner, as the corporation was a sweets manufacturer. The Joined Partywas not in business for himself and performed all work at the Petitioner’s place of business and at the Petitioner's direction.

It was noted that in addition to the work as a packer, the Joined Party performed volunteer services at the Petitioner's diner. The volunteerservices were notaddressed intheliability determination issuedby the DOR and are not considered in the Recommended Order. ThePetitioner's liabilityfor wages paid to the joined party is due solely to the services performed for the Petitioner's sweets manufacturing business.

Rule 60BB-2.035(7), Florida Administrative Code, provides that the burden of proof is on the protesting party to establish by a preponderance of the evidence that the determination was in error. In view of the very specific clauses of the signed agreements regarding the Petitioner’s right to control the relationship, it is concluded that the Petitioner did not meet this burden. The Joined Party and other workers performing services as production/stock persons for the Petitioner under the same terms and conditions were employees. It is recommended that the determination be affirmed.